Private Equity is Overhung

For every private equity firm running low on uncommitted capital, there apparently are dozens that have dry powder pouring out of their pockets.

That was the message yesterday from Andrea Auerbach, a managing director with Cambridge Associates, in a presentation at the SuperReturn US conference. She said that Cambridge puts the current private equity overhang at approximately $425 billion, which is 3.5x higher than the overhang at this time in 2000. Moreover, that mammoth figure represents 54% of all capital commitments made between 2004 and 2009.

Over 85% of the $425 billion is in funds larger than $1 billion, including 48% in funds larger than $5 billion.

Considering how many firms claim to be starved for cash, it appears that the PE market might be bifurcating into the have-nots and have-too-muches.

Below is a quick video interview I did with Auerbach at SuperReturn: